SEC inspector general David Kotz's report called the probes "incompetent."

But he said he found no evidence of any improper ties between the regulatory agency and Madoff, and it also dismissed speculation that senior SEC officials may have tried to influence the probes. But, three agency exams and two investigations of Madoff's investment strategy resulted in no action.

Bernard Madoff & His Victims

The SEC "never took the necessary, but basic, steps to determine if Madoff was operating a Ponzi scheme," Kotz concluded.

Revelations in December of the agency's failure to uncover Madoff's decade-long Ponzi scheme touched off one of the most painful scandals in the agency's 75-year history.

Earlier this year, a whistleblower who repeatedly warned the SEC that Madoff was perpetrating a massive investment fraud testified to Congress that the agency is "financially illiterate" and too cozy with those it is supposed to be monitoring.

Harry Markopolos, an independent financial fraud investigator told Congress that he believes the SEC was afraid of Madoff.

Madoff, 71, pleaded guilty in March and was sentenced to 150 years in prison for operating the $65 billion dollar scheme.

Last month, Madoff reportedly told a lawyer for some of his victims that he had met several times with officers from the Securities and Exchange Commission -- and that he wasn't surprised that those meetings led nowhere.

Madoff cost thousands of investors over several decades at least $13 billion as he told them the money had grown to about $65 billion. By the time he was arrested in December, only several hundred million dollars remained in the accounts of his private investment business. The fraud depleted the bank accounts of charities and businesses and erased the retirement funds of thousands of people.

Madoff and his wife have relinquished more than $100 million in assets, and authorities have identified more than $1 billion in assets that can be distributed to victims, many of them elderly and living in the New York area and Florida.

The SEC has said no evidence of wrongdoing by its staff has surfaced in connection with its failure to investigate credible claims about Madoff. But the top cop at the SEC resigned after receiving an angry dressing-down before Congress over the agency's failure to detect the massive fraud.

SEC Chairman Mary Schapiro has said the agency has been revamping itself, buttressing enforcement efforts and taking initiatives to protect investors following the Madoff scandal.